Franchise Dispute Solicitors
Franchise disputes happen when the franchisee or franchisor thinks the other has broken the franchise agreement.
At Lawhive, our network of specialist corporate lawyers can help you assess if your franchise dispute claim is valid, advise on your rights, and assist in working to resolve the problem, either through negotiations or litigation.
Contact us today to speak to our Legal Assessment Specialists for a free quote for the services of a specialist lawyer.
What are the common causes of franchise disputes?
Franchise operations are complex business organisms with many moving parts, which can break down when not well attended to.
Some of the most common causes include:
Payment delays – fees and royalties
Poor business practices – incomplete or late records
Breach of non-competition agreement
Breach of intellectual property rights
Breach of obligations
Misrepresentation
Disputes relating to personal guarantees
Failure to meet agreed targets
The termination or non-renewal of a franchise agreement:
A damages claim for loss of profits
A breach notice against one of the parties
The franchisee challenges a restrictive covenant
Injunctions or court orders are made
Franchise disputes can be tricky and costly to sort out. Often, just talking can solve the problem. But sometimes, there's no easy fix. If that happens, you might consider leaving the franchise agreement. However, it's important to seek advice to understand if and when you can do this as per the agreement.
What happens when a franchise agreement is breached?
If there's a breach of your franchise agreement, it's important to keep records and consider issuing a breach notice.
For minor breaches, you might be able to find a solution to keep the agreement going. Or, if a franchisor fails to meet obligations like providing training or support, the agreement can usually be terminated by mutual agreement.
In some cases, either party may have the right to terminate the agreement if there's a breach.
Seeking legal advice early on can help you understand your options taking into account the situation and the terms of the agreement.
Can I end my franchise agreement?
There are usually no clauses allowing franchisees to end the agreement early, but an agreement might have termination clauses.
In some cases, the franchisee might need to pay a fee or the franchisor might buy the business.
If a franchisee wants to end the contract early, it's usually due to a breach of contract. Or, if a franchisee goes out of business, it technically ends the agreement, but the franchisor can claim expected revenue.
How to avoid franchise disputes
The easiest way to avoid a dispute is by drafting a carefully worded franchise agreement, to prevent unnecessary and time-consuming litigation.
By including the following in a franchise agreement, you can prevent or easily manage most disputes:
Each party’s post-termination rights and obligations
Exit guarantee and security to facilitate a smooth exit
Dispute resolution clauses, including preferred arbitration form and court
Details about mediation
How do you settle a dispute in franchising?
Alternative dispute resolution is typically the easiest and most cost-effective way to resolve a franchise dispute.
When a relationship is severely damaged, alternative dispute resolution (ADR) may not work. In such cases, if both parties can't agree, they might need to go to court. However, court should be a last resort, as it can be costly and time-consuming for both franchisors and franchisees.
Can I get my money back from a franchise?
If you decide to back out of the franchise agreement after paying the franchisor, you can get a full refund within 14 days as per the cooling-off period.
Can a franchisor take back a franchise?
Yes, franchisors can usually end a franchise agreement without the franchisee's agreement. This can leave franchisees with financial losses, like owing money on loans or leases.
How can Lawhive help?
At Lawhive, our corporate solicitors can advise you on your options in the event of a franchise dispute. They can also support alternative dispute resolution, which is often faster and more cost-effective than going to court, or help build your case and represent you should litigation become necessary.
To discuss your situation and get a fixed-fee quote, book a free call with our legal assessment specialists.